Overland board ditches CEO

Overland Storage's board has parted company with its president and CEO, Christopher Calisi. In its statement the board did not say whether Calisi resigned or was fired, but the supposition is that he was fired.

The reasons for the termination were not stated. However it is an open secret that Calisi's tenure was in doubt after the company announced a seven-fold increase in losses in its last financial quarter.

The chairman, Scott McClendon, becomes interim president and CEO and an executive search is underway to find a permanent CEO.

The background to this is that Overland Storage was primarily a tape automation vendor in a market facing contraction and diminishing revenues due to the rise of disk-to-disk (D2D) backup. Overland sold its branded products directly and also supplied products to OEMs such as HP, its largest customer. It moved into disk-to-disk backup with its REO virtual tape product line, added a transfer to its NEO tape libraries (D2D2T) and then into protected primary storage with the Ultamus line. This was achieved by buying a company called Zetta for its technology and software developments.

The idea was to cover all tiers of storage: primary disk; secondary disk; and tape backup, with an integrated line of products. It made more sense to Overland than to its customers who couldn't, evidently, see why the market needed another RAID drive array vendor.

However four crushing blows occurred, two of them self-inflicted.

First HP decided not to take future Overland tape automation products causing a big drop in Overland's forecast revenue stream. Then ADIC tried to buy Overland and a multi-month struggle culminated in a defeat for ADIC. It seems likely that management was dominated by the resistance to ADIC for much of this time. ADIC was then bought by Quantum.

Thirdly, and in an attempt to reduce costs, Overland outsourced its manufacturing to a contract manufacturer. Unfortunately this was done badly and product delivery reliability allegedly suffered. This caused Dell, another Overland OEM, to cancel an OEM arrangement for two new tape automation devices. Overland also had to bring manufacturing back in house. Thus costs went up and the forecast revenue stream went down again.

The net effect of these four blows came with last quarter's figures where CEO Calisi announced the virtual closing down of the acquired Zetta operation, both in office facility and development team terms. It seems that the Ultamus line has not been well-received by customers although, ironically, the new ARCvault tape automation device has been selling very well.

Calisi's strategy is being reviewed. It would seem that Overland will not want to concentrate so much power in a combined president and CEO again. The board's statement said: " The board also created a new strategy committee to be chaired by director Mark J. Barrenechea, which will provide input to the board and management in the development of the company's corporate strategy."

It will be a hard task. Competitor Exabyte has been absorbed by Tandberg in a consolidating tape automation market. It's not that tape automation as a market is dead, witness M5 in the UK. But Overland does not have the market size, many would say, to compete in the virtual tape and the protected drive array market as well as develop strong products in its core tape automation base. It has, for example, no de-duplication strategy to reduce D2D backup data volume.

It has to make choices about where to concentrate its efforts and a withdrawal from the primary disk market is probably on the cards.

Inside the UK operation the terrmination was not unexpected according to a contact familiar with the situation: "It's not a surprise what with the things that have been going on. Think about the lifecycle of CEOs generally. He's had a good run, an exciting run. You've got to have a scapegoat or whatever."

What's the mood like inside Overland? "Let's just get on with it. We've got new products, new stuff. There's cash in the bank. We're still healthy. Leave us alone to get on with it."

This story, "Overland board ditches CEO" was originally published by Techworld.com.


Copyright © 2006 IDG Communications, Inc.

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